Small Business Optimism Index Softens in March

The NFIB Small Business Optimism Index fell to 104.7, 2.9 points below February’s reading. February’s report was the second highest reading in the 45-year history of the index, while March was the lowest since October 2017. Two of the ten index components rose in March, while eight declined. Twenty-eight percent of business owners surveyed said the next three months was a good time to expand, unchanged from last month’s reading.

Reported job creation fell three points, as 53% of businesses reported hiring or trying to hire, the highest level since 2006. However, 47% reported few or no qualified applicants for the positions they were trying to fill. Twenty-one percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 20% of owners plan to create new jobs, up two points from last month.

Seasonally adjusted, the net percent of owners expecting better business conditions decreased eleven points to 32%. The percent of owners reporting higher sales in the past three months compared to the prior three months was a net 8%, unchanged from February. Seasonally adjusted, the net percent of owners expecting higher real sales volumes grew three points to 28% of owners. Capital spending fell eight points as 58% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months declined three points to 26%.

Credit concerns remained historically low, as just 4% of owners reported that all their borrowing needs were not met, two points higher than February. Only 2% of business owners surveyed reported that financing was their top business problem. Just 13% of survey participants listed taxes as their top business problem, nine points below February and the lowest level since 1982.

Read the NFIB report.

About Stephen Newton

Stephen Newton is an economic research associate at ABA.